Turkiye’s steel capacity utilization fell to 55% – TCUD

The degree of utilization of steel mills is affected by low demand for steel and weak margins

Turkiye’s steel capacity utilization in January-October 2023 decreased to 55% compared to 65.4% in the same period of 2022. This was stated by the Secretary General of the Turkish Steel Association (TCUD) Veysel Yayan, Argus.Media reports.

Turkiye’s steel mills are negatively affected by low steel demand and weak margins.

The global steel capacity utilization rate for the period was 75.3%, up from 74.3% in January-October last year.

Turkiye’s steel production in January-October fell by 8.8% y/y – to 27.5 million tons. The decline reflects the shutdown of steel mills after the February earthquakes and high energy prices in the first half of the year.

Turkiye’s steel exports fell to 7.5 million tons in January-September, down from 12.4 million tons a year earlier. At the same time, steel imports to the country are growing – Turkiye is now a net importer of steel products from the EU and the fourth largest importer in the world.

«The import of flat rolled products in January-September amounted to 6.7 million tons. These volumes satisfied almost half of Turkiye’s demand for flat rolled products, which increased this year,» commented Veysel Yayan.

Since October 2023, Turkiye has increased wholesale natural gas prices for large industrial enterprises by 20% compared to August. In addition, the country raised electricity tariffs by 20%, which puts additional pressure on the country’s steel industry.

The last time Turkiye raised natural gas prices was in September 2022. At that time, tariffs increased by 50% amid rising demand due to the military aggression of Russia, the largest gas supplier to Europe. This trend continued until the end of the year, but in February 2023, BOTAŞ announced a 13.3-17.2% reduction in natural gas prices for large industrial enterprises. This was followed by price adjustments in March and April – by 20.95-26.12% and 20.01%, respectively. Subsequently, tariffs remained stable.

As GMK Center reported earlier, steel production in Turkiye in 2022 decreased by 12.9% compared to 2021 to 35.1 million tons. TCUD expected a drop in production of more than 13%. Over the year, steelmakers exported 19.6 million tons of steel, down 17.7% y/y. The main factors behind the decline in production are rising production costs and falling global steel demand.